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The risks to your business
The risks to any business that fails to comply with any
laws are not always as obvious as they may at first seem. Naturally,
risks come in many guises and are often not realised until it
is too late. Risk Management should consider all the risks
to a business, irrespective of size or nature, that threaten
its ability to operate in a controlled and effective manner.
In recent years, Risk Management has been referred to as
a set of procedures aimed at ensuring that all assets, which
includes people, are continuously protected, economically viable
and profitable. As an Owner/MD of a SME, many financial risks
are only too well known, with cash-flow, interest rates, bad
debts, increasing costs, VAT etc all soaking up precious time
and resource. These can often be foreseen and steps taken to
avoid serious pitfalls before they threaten to ruin the business,
because it makes sound business sense to do so. Likewise, it
also makes sound business sense to control the operational risks,
especially if these are also legal requirements. Enter
the Health & Safety Legislation.
There is unlikely to be any worse scenario for any business
to face than that of a major fire or accident in the workplace.
Quite apart from the fact that it may well bring all operations
to an abrupt halt, it will have a long and lasting, possibly
permanent, damaging effect on the business and possibly many
of the employees. It may even prevent the business from successfully
operating again.
Now, if that doesn't seem quite bad enough, consider the scenario
where people are injured (or worse) and that the fire or accident
could have been prevented by the implementation of even the most
basic health & safety legislation that has existed since
1974, namely The Health and Safety at Work etc. Act. The
full force of the law not only will apply, but that the likelihood
of insurance policies becoming at worse, invalid, at best, only
partially applicable, are significantly increased.
At very best, insurance will only cover such things as employer's
and public liability, damage to buildings, vehicles, equipment
(sometimes), product liability and business interruption,
although this list is not necessarily exhaustive.
Uninsured losses, however, include sick pay, overtime pay
(to get back to some form of operations), repairs (to
tools & equipment), product losses, investigation costs,
legal costs, loss of goodwill, loss of (corporate) image,
hiring & training of replacement staff, loss of irreplaceable
(in-house designed and built) equipment, perhaps personnel
(actual or through injury), increased insurance premiums,
any fines from the courts and related costs (both likely
to be very high) etc. etc. Loss of morale and enthusiasm
are also likely to be real but intangible losses that affect
the business for a long time afterwards. In fact, the HSE has
shown in case studies (see reference below) that uninsured
costs were likely to be up to eight times that of insured
costs (the total cost of all insurance premiums) and in some
instances, much higher ratios were found. Finally, of course,
serious breaches of health & safety legislation can and increasingly
does result in jail sentences for the responsible person or persons,
which in the case of the SME, is quite simply the Owner/MD. The
law regards you, the responsible person, as the expert on your
business and as such, best placed to know how to operate your
business in a safe and controlled manner.
The above may seem intimidating, but only if you are leaving
yourself and your business wide open to serious risks. Even the
Employment Legislation has dramatically changed in the last few
years, particularly through The Employment Rights Act,
1996. In some cases, both this and the Health & Safety
Legislation supplement and overlap each other in principle, as
both centre around a 'duty of care'. Indeed, it is highly recommended
that Health & Safety, Quality Assurance, Personnel &
Employment and, if applicable, Investors In People
are all dovetailed into one another to produce a better integrated
approach that is much easier to manage and control than treating
each one as a completely separate entity.
The risks to your business are many and you as an Owner/MD
have to be aware and responsible for them all. But you needn't
be alone. Let us assist you in both identifying and managing
these risks and allow yourself more time and resource to get
on with what you know best. Running your business.
Reference:
HSE The Costs of Accidents at Work HS(G)96 HMSO
1993 ISBN 0 11 886374 6
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